2010 is full of hopeful predictions and forecasts for stock market and economic recovery. Every stage of the economy has certain sectors and investments performing well and others declining. What will 2010 possibly bring?

2010 Economic Prediction on Gold

November 2004 to 2009 has seen gold prices rise from a little over 400 dollars per ounce to 1,200 dollars an ounce. Was the price of gold tripling in value over five years warranted? Granted, some investors like to hedge with gold against the falling value of the US dollar, but a massive bubble has been created.

While its possible that gold may continue to rise and trade with much volatility in the short term future, it is much more likely that as the US economy stabilizes, hedging strategists will turn to methods other than gold. Usually when the hype for a commodity is highest, the crash is directly around the corner.

Most will recall the price of oil rising from 50 to over 140 dollars a barrel between 2007 and 2008, and the subsequent crash back to 40 dollars a barrel in 2009. The volatility of gold could have a similar move regardless of how much per ounce banks and jewellers are willing to pay today.

Future Forecast for Oil

Late 2009 had the price of oil hovering around 80 dollars per barrel. What predictions will 2010 bring to fruition? Generally as the economy recovers, so does the price of oil. People will spend their money on petroleum based products and take more vacations thus increasing the demand on oil. As well, as much as ‘Peak Oil’ might be over hyped, there is truth to the idea that our demand will eventually outstrip our supply leading to rocketing oil prices.

Will oil double in value over the next year? A much more realistic estimate would be a range of 65 to 95 dollars per barrel that would keep many stock market trading oil field companies profitable and passively looking for more reserves. That being said, hype and volatility could lead to a wild ride for commodity futures investing.

General Economy Outlook for 2010

Will the housing market bounce back? Will interest rates rocket? What about discretionary spending and stock market forecasts in general?

Between 2007 and 2009, the world saw the stock market drop 50 percent, and then recover to around 75 percent of its former levels. Will the market bounce up in 2010 to completely recover and trade at the pre-recession level? Most would argue that today’s economy is far from what it was a few years ago. Perhaps a more realistic view is painted today.

While most do not expect the world to rally to new highs in 2010, neither do they expect a massive aftershock. As economic mop-up is still taking place, investors are positioning themselves for a much more realistic growth curve.

The Future and Investing

Because the world is so unstable and cycles from boom to bust can devastate one’s savings, it is often best to invest in life itself. People need to build up treasures that the economy can not touch such as relationships, the joy of giving, and becoming a better person. Being rich or poor is simply a state of mind.

Which gold, oil, and economic stock market forecasts and predictions for 2010 will come true? Hopefully only the good ones.

Sources

Allen Sykora, “Gold Prices Edge Higher”, 5 November 2009, Wall Street Journal.

Keith Johnson, “Green Ink: Peak Oil, Climate Hopes, and the Wilfully Blind”, 18 November 2009, Wall Street Journal.